UK Government: The Carbon Plan

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The Carbon Plan: Delivering Our Low Carbon Future

Government of the United Kingdom

Source, aims and scope

The Carbon Plan: Delivering Our Low Carbon Future waspresented by the UK Government to its parliament in December 2011. It provides an integrated policy framework and set of initiatives to achieve the UK national emissions reductions targets, focusing particularly on its fourth carbon budget period, 2023–27.

The document includes sectoral plans covering: buildings; transport; industry; electricity; agriculture, forestry and land management; and waste and resource efficiency. Details are provided for where each sector is up to in terms of emissions reductions, where it should be in 2050, and key transition initiatives over the next decade, including a timeline of critical decision points in the period to 2030.

Noting the many uncertainties in trends over the timeframe being considered, the plan includes scenario analysis showing different combinations of measures and outcomes for meeting its emissions reductions objectives as cost-effectively as possible.

Policy agendas for the devolved administrations of Northern Ireland, Scotland and Wales are included and there is discussion of complementary policy commitments and leadership required by the EU and other national governments.

Emissions reduction and energy targets

The UK Government has national emissions reductions targets, legislated in the UK Climate Change Act 2008, of 34 per cent by 2020 and 80 per cent by 2050 (from 1990 levels). The legislation provides for the setting of five-yearly carbon budgets. In June 2011 the Coalition government set a target of 50 per cent emissions reductions to be achieved within the fourth carbon budget period (2023–27).

The UK also has a target of achieving more than 30 per cent renewable energy in total electricity generation by 2020.[i]

Assumptions and priorities

Technology and innovation

The plan emphasises the crucial role of technological innovation in reducing costs associated with the transition. It points to the need for continued public funding for low carbon energy innovation, as well as the opportunities for the UK if it can capture a greater share of the growing global market for low carbon technologies.

The scenario analysis reveals some flexibility and uncertainty about which technologies will be most important for the UK over the next few decades, including scenarios that emphasise a greater or lesser role for renewable energy, energy efficiency, nuclear, CCS and bioenergy.

The implementation of energy efficiency measures will continue to be a major focus across all sectors. Further priorities outlined in the sectoral plans include:

buildings

particular focus on efficiency measures, including ensuring all cavity walls and lofts are insulated over the next decade

laying the foundations for district heating networks and mass installation of air and ground source heat pumps.

transport

sustainable biofuels likely to form a major component of UK commitment to source 10 per cent of transport energy from renewable sources by 2020

emphasis on encouraging modal shifts to public transport and rail freight.

industry

focus on efficiency in energy and material use, as well as design of industrial processes, bioenergy and electrification to replace fossil fuels, and CCS technology (beyond the 2020s).

electricity

gas and nuclear energy will continue to play a role in electricity supply in coming decades

fossil fuel power stations assumed to be fitted with CCS technology by 2050

continued development of renewable energy largely from wind and marine sources, including support for industry to reduce costs in offshore wind

UK electricity grid will be extended and upgraded to improve transmission capacity and flexibility.

agriculture, forestry and land management

focus on improved crop nutrient management, improved livestock productivity and more efficient use of on-farm energy and fuel. There is also an ongoing commitment to expanding woodland cover.

waste and resource efficiency

combination of actions to reduce the production of waste, as well as recycling and the expansion of investment in anaerobic digestion, designed to work towards a zero waste economy

generating heat and power from waste treatment.

Economics and finance

The initiatives outlined in the UK Carbon Plan include a variety of market-based, regulatory, direct investment and social marketing approaches. Key policy initiatives include continued involvement in the EU Emissions Trading Scheme, the ‘Green Deal’ enabling households and businesses to invest in energy efficiency improvements at no upfront cost; and the establishment of a green investment bank to support investment in emissions reduction infrastructure and projects.

Several scenarios were developed to show different ways in which emissions can be reduced depending on the success of different policies and technologies over the UK’s fourth carbon budget period. These scenarios variously emphasise: high emissions abatement in low carbon heating; high abatement in transport and bioenergy demand; a focus on high electrification; and a more significant role for the purchase of international carbon credits.

The plan includes cost-effectiveness as a key principle and favours the creation of competitive market conditions, rather than ‘picking winners’, to drive innovation and cost reduction in the low carbon technologies required. At the same time, the need for the government to take a long-term view is seen as critical to ensuring cost-effectiveness in the long-run, as it is likely that a cost optimal transition will require deployment of technologies in the medium term that may not be the most cost effective if considered only in light of short-term conditions (e.g. a carbon price) (p. 16).

The factors taken into account in developing the scenarios included:

static cost effectiveness (against the forecast carbon price in the short term)

The total net present cost over the lifetime of the policy measures described in earlier carbon budget periods (which will continue to deliver emissions reductions during the fourth budget period) is estimated at £9 billion (p. 112).[ii] The costs of meeting the fourth carbon budget will depend heavily on the combination of policies implemented in coming decades. The net present values range from a net benefit of £1 billion to a net cost of £20 billion. Putting these costs into perspective the plan notes that this amounts to an estimated average cost of around 0.4 per cent of UK GDP per year over the first three carbon budget periods (2008–22) and 0.6 per cent of UK GDP per year over the 2023–27 period. Compared to costs of not tackling climate change, this is considered easily favourable.

The plan does not explicitly discuss options or priorities for reducing overall consumption, restructuring production or reframing economic growth in order to improve emissions reduction outcomes.

Social equity

The UK Carbon Plan includes a commitment to ensure fair distribution of the costs of the low carbon transition. It points to measures to target assistance for energy efficiency programs and reduce the impact of emissions reduction policies on vulnerable and low income individuals and communities as evidence.

The plan also refers to the UK’s commitment to providing finance to support mitigation and adaption in developing countries.

Governance

The UK Climate Change Act 2008 requires the UK Government to set five-yearly carbon budgets three budget periods in advance. This plan is primarily an overview of policies to be led and implemented by the UK government in the fourth carbon budget period (2023–27), although it includes measures from the previous three budget periods and also considers the long-term view to 2050. The plan builds on advice from the independent Committee on Climate Change, and displays a sophisticated level of integration and coordination of responsibilities between different government departments and authorities.

There is also strong commitment expressed in the plan to working cooperatively with other EU member states to ensure the EU provides leadership and builds momentum internationally for a low carbon transition.

Social and political change

The plan acknowledges the need for industry and the public to be ‘pulling in the same direction’ as the Government in order to achieve the transition outlined (p. 12). It claims to show that, with public acceptance, it is possible for the UK to ‘move to a sustainable low carbon economy without sacrificing living standards, but by investing in new cars, power stations and buildings’.

[ii] This does not include the benefits of emissions savings in the sectors not covered by the EU carbon permit market, estimated to deliver a net benefit to the UK of £45 billion over the lifetime of the policies.